Seaway HCO Pty Ltd

[2021] FWC 3667

[2021] FWC 3667

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

Seaway HCO Pty Ltd
(C2021/3049)

DEPUTY PRESIDENT COLMAN MELBOURNE, 30 JUNE 2021

Variation of redundancy pay.

[1] Seaway HCO Pty Ltd (company) has made an application under s 120(2) of the Fair Work Act 2009 (Act) to have the Commission reduce the redundancy entitlement of Ms Sung Hong. Ms Hong was employed in the position of dispatch officer at the Hankook Tyres warehouse in Altona North, a site which the company managed for Hankook. Ms Hong’s employment began on 1 June 2018 and ended on 31 May 2021. Because she had 3 years of service, Ms Hong is entitled to 7 weeks’ redundancy pay pursuant to s 119 of the Act.

[2] The company asks the Commission to reduce Ms Hong’s redundancy entitlement to nil because it offered her an alternative role in the same area and for more pay. It contends that this was an offer of ‘other acceptable employment’ for the purposes of s 120(1)(b)(i) of the Act. Ms Hong declined the offer, and instead took up a role with another employer.

[3] Section 120 confers on the Commission a discretion to reduce the amount of redundancy pay to which an employee would otherwise have been entitled under s 119 of the Act. Section 120(1) states that the section applies if an employee is entitled to be paid an amount of redundancy pay under s 119, and the employer ‘obtains other acceptable employment’ for the employee. These are the jurisdictional facts that must be established before the Commission may exercise its discretion. Section 120(2) then states that the Commission ‘may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that the FWC considers appropriate’. If the Commission makes an order under s 120(2), the amount of redundancy pay to which the employee is entitled is the reduced amount specified in the determination (see s 120(3)).

[4] The key questions for consideration in the present matter are whether the company obtained ‘other acceptable employment’ for Ms Hong, and if so whether I should exercise my discretion to reduce the amount of Ms Hong’s redundancy pay.

Factual background

[5] The circumstances surrounding the redundancy of Ms Hong’s position are as follows. The company’s contract to manage the Hankook warehouse ended on 31 May 2021. On 1 June 2021, responsibility for management of the warehouse was assumed by Hankook’s parent company, Samsung SDS (Samsung). The company had managed the site for 3 years, and had deployed five employees, including Ms Hong, to work at the site. On 12 May 2021 Ms Jacinta McMonagle, the company’s head of human resources, and Mr Rohan Mitchell, a company manager, attended the Hankook site and told employees that the company’s contract with Hankook would end on 31 May 2021, that the employees’ employment with the company would end, and that Samsung might make offers of employment to some employees. Later in May 2021 several employees accepted offers of employment with an entity that would provide services to Samsung at the site. Ms Hong was not among them.

[6] On 26 May 2021, Mr Mitchell advised Ms Hong that there was a suitable position available for her at the company’s main Altona depot. Ms Hong asked Mr Mitchell for the job description. Mr Mitchell’s email to Ms Hong of 27 May 2021 stated that the position was that of supply chain officer. The job description stated that the duties would be spread across the warehousing, transport and financial aspects of the business, and that they would involve monitoring, processing and invoicing the jobs coming into the warehouse. Mr Mitchell advised Ms Hong that the rate of pay was $26.00 per hour, and that the position was full-time, commencing the following Tuesday. Later that day, Ms Hong declined the offer.

[7] On 28 May 2021, Mr Mitchell gave Ms Hong a letter stating that her position was redundant, that the company had identified a suitable alternative role, and that Ms Hong had declined to accept it. The letter stated that Ms Hong’s last day of employment would be 31 May 2021, and that she would receive a redundancy payment in accordance with the National Employment Standards (NES) in the Act.

[8] On 31 May 2021, Mr Mitchell sent an email to Ms Hong, in which he stated that the human resources department had told him that, because the company had offered her the alternative role, she may not be entitled to a redundancy payment, and that the company would be making an application to the Commission to reduce the amount of her payment to nil. The message also stated that the alternative role was still available. Ms Hong did not change her mind about the alternative role. She accepted a position with another employer.

Submissions of the parties

[9] The company contended that it obtained other acceptable employment for Ms Hong within the meaning of s 120 of the Act. It said that Ms Hong was offered a suitable role, in the same locality, on a higher wage, and that she chose instead to accept a position with another employer. The company submitted that the alternative role, like Ms Hong’s redundant role, involved processing and invoicing orders. It acknowledged that the incoming cargo in the new role was diverse, whereas in Ms Hong’s previous role it consisted of tyres, and that the new role would require a certain amount of learning. However, the company emphasised that the alternative role carried a higher annual salary $50,700; the salary of the redundant position was $48,750. Further, the alternative role offered opportunities for career progression within the Seaway corporate group. The company submitted that Ms Hong’s skills and experience made her well suited to the new role, however she declined it and accepted a job with another employer, and it was therefore reasonable for the redundancy entitlement to be reduced to nil.

[10] Ms Hong submitted that she deserved to receive her full redundancy entitlement because she had rendered three years of good service, and that the company had confirmed to her in writing that she would receive a redundancy payment in accordance with the NES. She said that the company had only raised with her the possibility of alternative employment at a very late stage, several days before the end of her employment, and that by this time she was already speaking with another employer about a better offer. Ms Hong said that she believed she was sufficiently qualified to receive a higher wage than that offered by the company, and that she could not accept such an offer. Ms Hong acknowledged that the alternative role was similar to that of her redundant position, but noted that it involved more diverse cargo, and that she was not experienced in the financial aspects of the role. Ms Hong submitted that the company’s application to reduce her redundancy payment should be dismissed.

Consideration

[11] It is clear that the company obtained other employment for Ms Hong. It offered her a position at its Altona site. It was a late offer, but it was made before the employment ended. This is significant because s 120 applies only where the employer obtains other acceptable employment ‘for the employee’. It does not apply to employment offered to former employees. The question is whether the other employment was ‘acceptable’.

[12] The fact that Ms Hong did not accept the alternative role is not determinative of whether the employment was acceptable for the purposes of s 120. ‘Acceptable’ means ‘able to be agreed to’, but it also means ‘suitable’. The question of whether other employment is acceptable is to be approached objectively, and with regard to all the circumstances. In the context of s 120, the work associated with ‘other employment’ with the same employer will necessarily be different from that of the position that has become redundant, at least to some extent. If there were no differences, the redundant role would still exist. In assessing whether other employment is acceptable it is relevant to consider the differences between the role and the redundant position, as well as the new role’s remuneration, and where the role is located.

[13] In the present matter, the role offered to Ms Hong had a higher salary. It was to be performed in the same suburb of Melbourne as her previous role. The new role was predominantly desk-based, and was directed at a broader range of logistical activities. I consider that it was somewhat more challenging than Ms Hong’s previous role. However, Ms Hong did not contend that the role was too challenging, or that she was not well suited to it. She said rather that she lacked experience in relevant financial matters. But the company maintained that Ms Hong would have been provided with any necessary training, and that her skills and experience made her a good fit for the role. Ms Hong did not dispute this. Because the alternative role was somewhat more challenging than her previous role, a correspondingly higher wage was appropriate. In my view, the salary offered to Ms Hong was reasonable. I do not consider that the nature of the work associated with the new role would reasonably have required a higher salary to be offered in order for the other employment to be acceptable.

[14] I appreciate that Ms Hong did not find the alternative role acceptable. Another employer had, in Ms Hong’s words, made her a better offer. It is understandable that she would accept that offer. However, the question is whether the other employment offered to Ms Hong by the company was objectively acceptable. I consider that it was. The company obtained for Ms Hong ‘acceptable other employment’ for the purposes of s 120(1)(b)(i) of the Act. It was suitable work. It was a somewhat more challenging role for a slightly higher wage, in the same field, and in the same area.

[15] Having established the jurisdictional facts required by s 120(1), I must now consider whether to exercise my discretion to reduce the amount of Ms Hong’s redundancy pay. In doing so, it is appropriate to balance the conclusion that the company obtained other acceptable employment for Ms Hong against any considerations that might tell against the exercise of the discretion in this case. I take note of the fact that Ms Hong was presented with the alternative role only at a late stage. However, she could still have chosen to remain employed by the company in an acceptable role. I note also that Ms Hong was initially told that she would receive a redundancy payment. But the company corrected this advice. The company cannot be considered to have somehow waived its right to make an application under s 120 of the Act.

[16] I consider that it is fair and reasonable in the present circumstances to reduce the redundancy entitlement to nil. Acceptable alternative employment was offered to Ms Hong and I do not consider there to be any significant countervailing considerations telling against the exercise of my discretion. Ms Hong could have continued to work at the company in an acceptable role. She chose instead to accept another job with higher pay. This was entirely reasonable. In my view however, it would not be reasonable for the company to have to make a redundancy payment in these circumstances. Ms Hong’s employment did not need to end for reason of redundancy. Although her position of dispatch officer was made redundant, the company offered Ms Hong comparable ongoing work, which she declined.

Conclusion

[17] I am satisfied that the company obtained other acceptable employment for Ms Hong, and that in all the circumstances I should exercise my discretion to reduce her redundancy pay to nil. An order will be issued separately reflecting this decision.

DEPUTY PRESIDENT

Appearances:

J. McMonagle for Seaway HCO Pty Ltd
S. Hong for herself

Hearing details:

2021
Melbourne
29 June

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